Out of the South cometh the whirlwind

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Day: 02/25/2010

After a rough 2009, US cotton industry officials are expecting the industry to rebound this year.

Cotton growers were hurt by weather woes, a trade war with Brazil and prices uncompetitive with other crops, National Cotton Council chairman Jay Hardwick said during the group’s annual meeting in Memphis, Tenn., earlier this month.

U.S. cotton seems poised to be “stronger and more prepared for the future,” Hardwick told the Memphis Commercial Appeal.

Cotton production in 2009 was hampered by fall rains, which caused some $750 million in overall crop damage last year in Arkansas, Mississippi and Tennessee.

In addition, government subsidies for grain — mainly corn for ethanol — increased corn prices. Farmers responded by switching from cotton to corn, which put cotton-industry infrastructure like gins and warehouses in a slump, according to the Commercial Appeal.

“This temporarily distorted all (agriculture) markets, but market forces are coming into play and some of these imbalances are getting corrected,” Arkansas cotton producer Larry McClendon told the paper, noting cotton prices should be competitive with corn this year.

The industry is expecting word this month from the World Trade Organization on the award Brazil will receive to settle alleged cotton market losses due to U.S. agriculture programs. In August, a WTO panel awarded Brazil nearly $294 million for the alleged losses. However, Brazil is expected to ask for more than $800 million.

Also, McClendon noted that a U.S. supply of 8 million to 10 million bales of cotton has slowly whittled away to about 4 million bales. Also, he said, the worldwide demand for cotton is returning after the recession.

“All of these are reasons for optimism,” he told the paper. “The numbers are coming together in cotton.”